Are you specifically looking to purchase a property that is a short sale in Boise, Meridian, Eagle, Nampa or the surrounding communities? Read below for information on short sales and REO properties.
A short sale takes place when the sale price of the home is less than what the seller owes. A buyer will put in an offer and the home and the seller may accept the offer, but the lender(s) of the seller has the final say. ALL short sales are subject to bank approval. Short sales can take anywhere from 30 days to as long as 6 months to get bank approval. Of course, this depends on the bank involved (some take longer than others), the number of loans on the property, the real estate agents’ knowledge of short sales (which can either hinder or help the process) and various other factors.
Some banks will only review one offer at a time and other banks will review multiple offers simultaneously. Sometimes a higher offer may come in on a property allowing that buyer to assume first position in the process, essentially “bumping” the other offer out of the way.
Depending on how your agent writes up the offer (which is where it is important to have an agent who is experienced in short sales), you may have the right to walk from the offer at any time prior to bank approval.
The property is typically sold “as-is.” The buyer can still do an inspection and my preference as a real estate agent is to structure the deal so that the inspection period does not begin until written bank approval has been received on the property.
An REO (“real estate owned”) property is one that belongs to the bank. If you decide to pursue an REO, the time frame is usually much shorter than a short sale (i.e., closing within 45 days). A bank will generally request a specific amount of earnest money and will usually require proof of funds (or a preapproval letter from a lender) with an offer. Some banks will require that the buyer be preapproved through their bank even if the buyer is already preapproved with another institution.
The bank may provide a property disclosure form, but they do not know anything about the property so they do not have to verify the working order of anything in the home. The property is usually sold as-is as the bank will typically not pay for repairs unless they are a condition of your lender funding the purchase.
In an REO transaction, the bank typically will not pay the appraisal fee (about $450), which is generally a fee paid by the seller. However, banks will often times pay a percentage towards the buyer’s closing costs and prepaid expenses.